Amidwestern urban life-care home in Iowa was challenged by city administrators regarding the home's tax-exempt status. The challenge reflects a growing national trend to reassess tax-exempt status to tax organizations not meeting nonprofit, charitable, tax-exempt criteria. In the past 5 years, no lifecare home or continuing care retirement community in Iowa has successfully challenged the tax-exempt appeal (DJ. Dutton, personal communication, January 7, 1997). Importantly, none of the previously challenged homes had undertaken a data-based assessment of their residents as the basis for their appeal. This article presents information on the data collected by two gerontological nurse consultants (JMD, KCB) that were used to profile and compare the life-care home's residents. Their data-based testimony helped determine that residents of this life-care home would otherwise be candidates for nursing home placement or other subsidized institutional care, and would not be able to live independently given the cost of community-based services.
The life-care home environment (Sidebar on page 10) offers a matrix of formal and informal support services critical in helping increasingly dependent elderly individuals maintain independence and avoid premature institutionalization. The availability of health care is an important adjunct to remaining independent as long as feasible and may be the primary reason for choosing a life-care home.
One study indicated that more than two thirds of life-care home residents identified the protection of long-term care provision as an important reason for joining such a home or community (Brower, 1994). However, numerous life-care homes have gone bankrupt in recent years because of failure to maintain adequate reserves or to accurately project future costs (Friends of Faith Retirement Homes, Inc., v. Black Hawk County Board of Review, 1997).
The life-care home referred to in this article (henceforth called "Springdale Manor" - a pseudonym), provides a life-care community for its residents through a series of independent living units, support areas, and a skilled nursing unit. As residents change in health status, they move along a continuum of care. The mission and goal of Springdale Manor is to provide living and care arrangements for retirees, to preserve their independence and dignity, and to allow the residents to maintain financial and functional independence. Through the life-care arrangement, elderly citizens of average or below average financial means are assured that they can continue to live indefinitely at Springdale Manor regardless of their financial circumstances. Residents pay an entry endowment and a monthly fee thereafter for life, regardless of whether they are able to live independently in their apartments, require assistance with activities of daily living (ADLs), or are in need of full-time nursing care.
Admission to Springdale Manor is restricted to those age 62 and older. The average resident resides in the home for 14 years, including 2Vz years in the nursing facility. In addition to room and board, Springdale Manor provides a vast array of services, facilities, and amenities. These include:
* Recreational facilities.
* Dining rooms.
* A chapel.
* Blood pressure and foot clinics.
* Barber and beauty salon.
* Nursing care facilities.
* A chaplain.
* Medical director.
* Licensed nursing staff.
* Emergency systems.
* Social workers.
* Activity directors.
* Fire suppression.
* Assistance with ADLs.
The entire facility is handicapped accessible and equipped with accommodations to assist those with infirmities to function independently.
Springdale Manor benefits from numerous volunteers within the community. The home's medical auxiliary assists residents and plans social events for them, free of charge. The board of directors also volunteers a significant amount of time and contribute donations to the home. There has been no substantial change in the operation of Springdale Manor over the years, with the exception that it has grown in size to accommodate more occupants (Friends of Faith Retirement Homes, Inc., v. Black Hawk County Board of Review, 1997).
BACKGROUND TO THE LAWSUIT
Springdale Manor was subjected to two previous tax assessment efforts in 1970 and 1978, though entitlement to tax exemption was continued. In 1993, when the board of review attempted to tax this life-care home, an appeal was made to the district court challenging the basis for a change in tax-exempt status. Importantly, not only does the loss of tax-exempt status result in taxation of the life-care home, but also donations to the home become taxable.
Tax exemptions based on religious and charitable grounds require that the articles of incorporation and bylaws of the life-care home provide that it shall not be operated for private profit. The corporation must be organized and operated exclusively for religious, charitable, and other tax-exempt purposes under state and federal law (Friends of Faith Retirement Homes, Inc., v. Black Hawk County Board of Review, 1997). The gratuitous or partly gratuitous care of older adults is regarded as a charitable purpose (South Iowa Methodist Homes, Inc., v. Board of Review of the City of Des Moines, 1970).
The crux of the argument made by the county to dismiss tax-exempt status rested on the claim that Springdale Manor was neither charitable nor nonprofit. The county further asserted that providing "luxurious services" to those who can well afford them is not charity. A representative for the county reviewed financial information on residents of Springdale Manor and alleged that they were not of lowincome status. Further, it was claimed that the assets of the Springdale Manor were managed to gain significant profit, most of which came from the independent living units (personal communication, Willson & Pechacek, PLC, June 28, 1996).
Faced with this legal challenge, Springdale Manor obtained representation by a law firm that supported tax-exempt status for residents in the independent living units (the health care and medical center section of the home were not challenged). Thus, it was necessary for the defendants to prove legally that theirs was a "charitable" home (the legal definition of charity includes the concept of saving government dollars). The basis of Springdale Manor's case was that it saves government money by helping keep elderly individuals out of nursing homes and off Medicaid. It accomplishes this in part by structuring their finances so residents are cared for for life, even if they run out of money or suffer catastrophic health problems.
STATISTICAL ANALYSES OF THE SEVEN SCALES OF THE ISAI
To provide proof of this concept, the law firm retained two gerontological legal nurse consultants. The role of the legal nurse consultant is distinct from that of paralegals and legal assistants (Sidebar on this page). The primary role of the legal nurse consultant is to evaluate, analyze, and render informed opinions on the delivery of health care and the resulting outcomes (American Association of Legal Nurse Consultants, 1995). The legal nurse consultants determined that selected background information and data were essential in support of this case, including:
* Specific and detailed information on each resident currently residing in the independent living units at Springdale Manor.
* Data from research and government documents citing specific indicators for nursing home placement.
The gerontological nurse consultants then correlated the two sets of data to demonstrate that many residents of Springdale Manor were at high risk for nursing home placement. They projected that these residents would be forced to spend down their savings to eventually qualify for Medicaid if they were not part of the life-care community. This approach is in keeping with the 1993 Supreme Court decision that judges must assess whether the reasoning or methodology underlying any expert testimony is scientifically reliable and relevant (Smith, 1998). The next section provides a brief overview of the instruments and methods used by the nurse consultants to support their claim and to argue for continuation of taxexempt status for Springdale Manor.
CORRELATIONS OF SCALES WITH DEMOGRAPHIC DATA, MMSE1 IADLS, AND PSMS
DATA COLLECTION INSTRUMENTS
The Iowa Self- Assessment Inventory (ISAI) was developed originally to determine perceptions of community-dwelling elderly individuals regarding their resources, status, and abilities (Morris & Boutelle, 1985). It is a 56-item, seven scale, self-report inventory designed to assess the following constructs (Morris, Buckwalter, Cleary, Gilmer, Hatz, & Studer, 1990):
* Economic resources.
* Emotional balance.
* Physical health status.
* Trusting others.
* Cognitive status.
* Social support.
Using the ISAI, residents indicated the degree to which each statement was true about themselves on a 4-point scale of "true," "more often true than not," "more often false than not," and "false."
The ISAI was among several standardized tools with well-established psychometric properties used by the gerontological nurses to determine key characteristics of Springdale Manor residents. In addition to the ISAI, they collected data using the Mini-Mental State Examination (MMSE) (Folstein, Folstein, & McHugh, 1975), the IADLS (Lawton & Brody, 1969) and the Physical Self-Maintenance Scale (PSMS) (Lawton & Brody, 1969).
The gerontological nurses collected data during a 216-month period. Each visit ranged from 15 minutes to 1 hour with a mean of 30 minutes per visit. Of all life-care home residents, 273 (80%) talked with the gerontological nurse and 29 (9%) refused to participate. Another 1 1 % of the residents did not participate because they were in the health center, on vacation, in the hospital, or not at home.
All residents of Springdale Manor were given an ISAI questionnaire through the mail and asked to complete and return it to the facility's office. The number of ISAI questionnaires returned by mail was 208. Eighty-two ISAIs were completed by the investigator or social worker reading each question to a resident, and 53 residents were unable or refused to complete the questionnaire. Thus, 290 (85%) ISAIs were usable for analysis. The gerontological nurse visiting in the resident's apartment collected the other data.
Demographic data collected on life-care home residents revealed the majority (79%) were women age 67 to 105 with a mean age of 84. Two hundred thirty-four (69%) of the respondents lived alone, 101 (30%) lived with their spouse, and 5 (1%) lived with another person. The majority of residents (54%) had attended or graduated from college, reflecting a well-educated sample from a university community.
Overall, residents of Springdale Manor perceived their income and assets to be slightly above the norm.
They perceived their emotional balance, trusting others, and social support to be approximately average. They perceived their physical health, mobility, and cognitive abilities to be slightly worse than others. The ISAI scores are reported in Table 1.
Correlations of ISAI subscale scores with the demographic data of age; education; and the MMSE, the total score for the IADLS, and the total score for the PSMS are found in Table 2. It is interesting to note that the relationships between both the IADLS and PSMS and the ISAI mobility scale are strong at r = .79 and r = .69, respectively. Therefore, correlations were run on individual items of the IADLS and PSMS with the seven subscales of the ISAI.
The ISAI subscale of economic resources, emotional balance, trusting others, and social support were not correlated with individual items on the IADLS. However, the ISAI mobility scale was strongly and negatively related to each IADLS question. For life-care home residents, this indicates poor mobility made it difficult to answer the telephone, go shopping, prepare food, perform housekeeping, do laundry, provide transportation, prepare medications for administration, and pay bills - a finding that adds validity to the ISAI. Small to moderate negative correlations were noted between the ISAI physical health scale with medication administration (r = -.15) and housekeeping and laundry (r = -.28). These data suggest a logical relationship - as life-care home residents become more physically ill, they have more difficulty with ADLs. The ISAI cognitive status scale did not correlate with the IADLS item related to housekeeping, but a moderate negative correlation was found with paying bills (r = -.35), a task which may require more intellectual functioning than housekeeping.
On the other hand, the MMSE and ISAI cognitive status scale correlated only moderately (r = .37). However, the MMSE concentrates on the cognitive aspects of mental function and tests the following categories: orientation, registration, attention and calculation, recall, language, three-stage command, reading, writing, and copying (Folstein, Folstein, & McHugh, 1 975); whereas, the ISAI measures the elderly individuals' perceptions of their cognitive status. This difference in focus may help explain the relationship between scores on these two instruments.
CORRELATIONS WITH PSMS
The ISAI scale of economic resources, emotional balance, trusting others, cognitive status, and social support did not correlate with individual items on the PSMS scale. As expected, the perceptions of lifecare home residents as to their physical health and mobility status did correlate negatively with the physical self-maintenance scale. Their perception of poor mobility was highly correlated with actual ambulation (r = -.74), and ability to bathe, dress, and groom were also correlated with poor performance and poor ambulation. Not surprisingly, residents who perceived their physical health as worse had more trouble with ambulation (r = -.34) and bathing (r = -.22) than those who reported better physical health. It is important to remember that high scores on the IADLS indicated less ability to perform a task, whereas high scores on the ISAI indicate perceived high ability or resources, thus explaining the negative correlations.
Data were also collected on special support services offered to lifecare home residents. These services included companion services, use of a whirlpool with staff assistance, use of lifeline, and being taken to meals. Using t tests, the nurse consultants compared life-care home residents receiving these support services to life-care home residents of similar age and mental status scores on the physical health and mobility scales of the ISAI. Use of whirlpool and companion services offered by the life-care home was significantly higher for those life-care home residents who reported mobility problems. Data on ADLs and instrumental activities of daily living (IADLs) were presented as graphic testimony during the trial. The presence of two or more limitations in basic ADLs and IADLs is associated with risk of death and nursing home residence (Prohaska, Mermelstein, Miller, & Jack, 1993). Data showed 60% of the Springdale Manor residents had two or more chronic conditions limiting functional abilities, while 40% had one or none (Figure).
Testimony of gerontological nurses documented support services rendered by staff to life-care home residents. Also included were data on the health-related activities performed regularly at Springdale Manor. The numbers of health-related activities during a specific period (e.g., delivery of medications, vital signs, dressing changes) were recorded and totaled. Reports were developed that enumerated the kinds of transportation, laboratory tests, communications (among physicians, hospital health care professionals, pharmacists, family, residents, and facility staff), and interventions received by residents (e.g., non-emergency and emergency assessments, admissions, falls, false alarms, and medications during a 24-hour time period), including a breakdown of these activities and communications by shift.
The gerontological nurses argued that because of the excellent services provided to apartment residents at Springdale Manor, residents are able to remain relatively independent and outside of nursing home care for longer periods of time. Staff are available to apartment residents through the "assistance with daily living" program. Program logs from the home dramatically documented the amount of assistance life-care residents are provided. Maintenance and housekeeping staff routinely assist apartment residents in many ADLs that they would otherwise be unable to perform. The nurse consultants asserted that Springdale Manor prevents isolation and provides transportation, emergency services, social contact, and counseling and emotional support to residents. These services and activities, in turn, lead to a high quality of life for the residents (Friends of Faith Retirement Homes, Inc., vs. Black Hawk County Board of Review, 1997).
Finally, in addition to data on cognitive and functional status and support services presented by the gerontological nurse consultants, information on the costs of comparable community-based services was also included as part of their testimony. Nursing home care costs in the local area were examined and a comparative analysis of the characteristics of Springdale Manor residents versus statewide data on elderly individuals residing in nursing homes was conducted using data from lowans in Long Term Care: A Survey of Resident Characteristics (Iowa Department of Human Services, 1996).
The judge found that while the facilities at Springdale Manor were safe and adequate, they were neither luxurious nor extravagant. He further noted that the rates at Springdale Manor compared favorably to those of other life-care homes in the Midwest. The judge ruled that Springdale Manor had at all times fulfilled its life-care commitment and had never terminated residents because of their inability to satisfy financial obligations. It was noted that in the past, numerous residents had been unable to fulfill their monthly fee commitment and that the home had accepted many residents with a reduced endowment and monthly fee requirements, based on consideration of the residents' financial situation. Importandy, no resident had ever been denied access to the home or had ever been asked to leave Springdale Manor for financial reasons (Friends of Faith Retirement Homes, Inc., v. Black Hawk County Board of Review, 1997).
The judge's ruling stated that were it not for the daily living and nursing assistance provided to Springdale Manor residents, 26% to 29% of those residents would require nursing home care at an average cost of $36,000.00 to $40,000.00 annually. In addition, 21% to 25% of the life-care home residents were judged to be at risk for nursing home care. These residents also would require substantial outside supervision and assistance if they attempted to live on their own (Hoffman, Rice, & Freudenheim, 1996).
Because of the advancing average age of Springdale Manor residents and the high percentage of individuals with at least one chronic illness, the proportion of residents at risk for nursing home placement was expected to increase (Hoffman, et al., 1996). Medicaid pays the bulk of nursing home costs in the United States, and Medicare pays the bulk of home health care costs. At Springdale Manor, residents at the apartments who move on to the skilled nursing unit do not rely on Medicaid for any portion of their care, regardless of need. The judge noted that because not all nursing homes accept Medicaid patients, the quality of care for Medicaid recipients is often less adequate than that provided at this life-care home.
Further, because of societal trends, divorce, mobility of families, increased age of population, and increased percentage of those working outside the home, there are fewer individuals available to care for relatives in need (American Association for World Health, 1999). This places a higher responsibility on elderly individuals to ensure they have arranged for their own care needs (Friends of Faith Retirement Homes, Inc., vs. Black Hawk County Board of Review, 1997).
The judge concluded that by providing life care to residents, Springdale Manor saves society substantial amounts in government services. Because Springdale Manor residents did not deplete their assets and rely on Medicaid for nursing home care, the court ruled that Springdale Manor could potentially save society over $900,000.00 per year in Medicaid costs (Friends of Faith Retirement Homes, Inc., vs. Black Hawk County Board of Review, 1997).
Based on these findings, the court ruled that Springdale Manor was exempt again from taxation (under Section 501 [c]  of the Internal Revenue code as a religious and charitable organization). The judge noted that credible evidence had been presented regarding taxpayer savings through the provision of life-care services and assistance with ADLs performed by this home. He concluded that because of the tremendous array of services available to residents of Springdale Manor, elderly individuals are able to reside in the apartments and live relatively independently for much longer periods of time than they otherwise would be able.
The court was convinced that 26% to 29% of the apartment residents would be residing in nursing homes or other expensive care facilities were it not for the health monitoring and assistance with ADLs available to the apartment residents at Springdale Manor (Treas, 1995). The judge ruled that either from the outset or within a relatively short period of time, a substantial number of such residents would exhaust their financial assets and become reliant on Medicaid for payment of their care needs. Finally, the court ruled that Springdale Manor prolongs dignity and quality of Ufe by allowing residents to live relatively independently for a longer period of time. The life-care commitment assures residents that when a transfer from the apartments to the health center is medically required, the resident will not be reliant on Medicaid to pay for care. The data-based evidence presented by the gerontological nurses clearly demonstrates that the lifecare commitment dramatically outweighed taxpayer costs associated with lost tax revenues (Friends of Faith Retirement Homes, Inc., vs. Black Hawk County Board of Review, 1997).
Data collected by gerontological nurses and presented as testimony supported the life-care home's taxexemption appeal. In this case, essential data from the ISAI, MMSE, IADLS, and PSMS were made available to the court through testimony of the gerontological nurse consultants. In addition to their expert assessment, comparative analyses conducted by nurses showed residents of Springdale Manor were more impaired than other community-dwelling elderly individuals in five domains of IADLs (Coleman, 1991).
Based on the testimony of the gerontological nurses, the judge ruled that a significant number of residents would be required to live in subsidized institutional settings were it not for the care provided them by Springdale Manor. Thus, the additional supportive services provided by the life-care home met the legal criteria for being a "charitable organization." Conclusively upholding the tax-exempt status, the court also noted that quality of care for Medicaid recipients is often less adequate than that provided by Springdale Manor (Maas, Specht, Weiler, Buckwalter, & Turner, 1998). The finding in favor of Springdale Manor was due in large part to the data collected by gerontological nurses using standardized tools.
Gerontological nurses are encouraged to expand their consultation roles by using systematic data collection strategies to advocate for care facilities, such as Springdale Manor, that provide quality care for older adults (Sidebar for Legal Nurse Consulting on page 11).
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STATISTICAL ANALYSES OF THE SEVEN SCALES OF THE ISAI
CORRELATIONS OF SCALES WITH DEMOGRAPHIC DATA, MMSE1 IADLS, AND PSMS